Comparison or difference between BRK-A and BRK-B
Monday, May 27, 2013
5:35 PM
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Labels: berkshire , brk , brk-a , brk-b , brka , brkb , comparison , hathaway , stocks , US
Labels: berkshire , brk , brk-a , brk-b , brka , brkb , comparison , hathaway , stocks , US
Modified from an answer read over the internet:
The two types of shares are essentially the same, except for the cost. Warren Buffet has refused to split the shares to get a lower share price and reports that Berkshire wants a very different type of shareholder. He is interested in the investor who is in for the long run, minimally concerned about daily price fluctuations, and minimal transactions and the high price associated with Class A shares maintains this.
Berkshire started to offer the Class B shares after (1) stockholders wanted a mechanism to gift shares to family members, and the gift tax limit is $10,000 ( so in the beginning you could gift a Class A share and it was less than 10K, but as the price rose this became impossible) and (2) private funds were getting ready to buy the Class A shares and then sell fractional interests via their fund.
Warren wanted to accomondate the first and prevent the second.
The floor manger for the Berkshire shares on the trading floor works to keep one Class B share = 1/30th of a class A share. It is not always a perfect 1/30th but it is often very close.
Berkshire also wants the price of the share to accurately reflect the underlying value of the business, and thus have minimal fluctuations.
The Class A shares also have a bigger voting right than the Class B shares (memory tells me that the Class B shares have a 1/200th of a vote even though they are about 1/30th in price.)
As always, please use your own judgment and research while investing!
The two types of shares are essentially the same, except for the cost. Warren Buffet has refused to split the shares to get a lower share price and reports that Berkshire wants a very different type of shareholder. He is interested in the investor who is in for the long run, minimally concerned about daily price fluctuations, and minimal transactions and the high price associated with Class A shares maintains this.
Berkshire started to offer the Class B shares after (1) stockholders wanted a mechanism to gift shares to family members, and the gift tax limit is $10,000 ( so in the beginning you could gift a Class A share and it was less than 10K, but as the price rose this became impossible) and (2) private funds were getting ready to buy the Class A shares and then sell fractional interests via their fund.
Warren wanted to accomondate the first and prevent the second.
The floor manger for the Berkshire shares on the trading floor works to keep one Class B share = 1/30th of a class A share. It is not always a perfect 1/30th but it is often very close.
Berkshire also wants the price of the share to accurately reflect the underlying value of the business, and thus have minimal fluctuations.
The Class A shares also have a bigger voting right than the Class B shares (memory tells me that the Class B shares have a 1/200th of a vote even though they are about 1/30th in price.)
As always, please use your own judgment and research while investing!
